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Summary of ERIA Research Projects
2012-2013
Summarised By
Anita Prakash, Director (Policy Relation)
Economic Research Institute for ASEAN and East Asia
Jakarta, Indonesia
April 2013
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ERIA Research Projects 2012
Deepening Economic Integration Page
1 The Mid Term Review (MTR) of the Implementation of the ASEAN Economic Community (AEC) Blueprint Ed. Ponciano S. Intal Jr.
1
2 Explicating Jakarta Framework on Moving ASEAN and AEC Beyond 2015 Ed. Ponciano S. Intal Jr. 5
3 AEC Scorecard Phase III-Towards Informed Regulatory Conversations and Improved Regulatory Regime: Logistics Sector and Trade Facilitation Ed. Ponciano S. Intal Jr.
7
4 Impact of Globalization on Labour Market Ed. Chin Hee Hahn 9
5 ASEAN+1 FTA and Regional Comprehensive Economic Partnership Ed. Lili Yan Ing 10
6 Coherence of Macroeconomic Policies in ASEAN Member States: Empirical Investigation of Experiences in 2000-2010 Ed. Wisarn Pupphavesa
12
7 Automobile and its Parts Manufacturing Industry in ASEAN and its Contribution to the Progress of Regional Integration Ed. Prof. Hideo Kobayashi and Prof. Hidetoshi Nishimura
14
8 Moving toward a New Development Model for East Asia - the Role of Domestic Policy and Regional Cooperation Ed. Zhang Yunling
15
Narrowing Development Gaps 9 Geographical Simulation Analyses for Eliminating the Infrastructure Bottlenecks towards
Balanced Growth in East Asia Ed. Satoru Kumagai
20
10 Innovation Between and Within Supply Chain: Empirical Study of Tracing Local and Global Production Knowledge Network in East Asia Ed. Patarapong Intarakumnerd
21
11 Towards Competitive and Innovative ASEAN SMEs: ASEAN SME Policy Index 2012 Ed. Sothea Oum 22
12 Global Production Networks and Host-Site Industrial Upgrading: Evidence from Car, Clothes and Semiconductor Firms in Southeast Asia and China Ed. Prof. Rajah Rasiah
23
13 Public Private Partnership in ASEAN Member Countries Phase II: Institutional Assessment to Develop Public Private Partnership System in Cambodia, Lao PDR and Myanmar Ed. Fauziah Zen
24
14 Enhancing Supply Chain Connectivity and Competitiveness of ASEAN Agriculture Products: Identifying Chokepoints and Opportunities for Improvement Ed. Ponciano S. Intal Jr.
25
15 Intellectual Property Policy for SME Development: Japanese Cases and Lessons to ASEAN Ed. Yoshifumi Fukunaga 28
16 Development Potential of the Content Industry in East Asia and the ASEAN Ed. Takahashi Nakamura 31
17 Standard Distribution Infrastructure for Consumer in the East Asia Region in the Field of 33
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Consumer Goods Distribution for Retailers and Wholesalers Ed. Tran Thi Van Hoa
18 Myanmar Comprehensive Development Vision Ed. Prof. Fukunari Kimura 36
19 Rule Making Features of New Trade Agreements and Role of Services Ed. Yose Rizal Damuri 38
Sustainable Economic Development 20 Management of Community Preparedness for Disasters: ASEAN Perspective
Ed. Fauziah Zen 41
21 Policy on Disaster Prevention and Reduction for Industrial Parks in East Asia Ed. Shigenobu Tanaka 43
22 Social Security System and Fiscal Policy Response in China, India, Indonesia Ed. Prof. Mukul G. Asher 44
23 Exploring the Environmental, Food and Energy Security Nexus in Southeast Asia Ed. Barry Desker 45
Energy Related Research Project 24 Economic Impact Evaluation of Investment on the Energy Savings and Low-carbon
Emitting Technologies in East Asia -Phase II Ed. Akira Yanagisawa
47
25 Analyses on Energy Saving Potential in East Asia Region Ed. Shigeru Kimura 49
26 Benchmarking of Biodiesel Fuels Standardization in East Asia Ed. Shinichi Goto 52
27 Extending the ERIA Working Group Methodology for Sustainability Assessment of Biomass Utilisation in East Asian Countries Ed. Masayuki Sagisaka
55
28 Energy Efficiency Roadmap Formulation in East Asia Ed. Prof. Hisashi Yoshikawa 58
29 Effective Investment of Power Infrastructure in East Asia through Power Grid Interconnection Ed. Ichiro Kutani
61
30 Development of Energy Security Index and Assessment of Energy Security for East Asia Countries Ed. Ichiro Kutani
63
31 Asian Potential of Biofuel Markets Ed. Kaoru Yamaguchi 65
32 Energy Market Integration in East Asia Summit Region: Deepening, Understanding and Moving Forward Ed. Yanrui Wu
68
33 Strategic Usage of Coal in the EAS Region Ed. Hironobu Oshima 72
34 International Cooperation in Nuclear Safety Management in East Asian Countries Ed. Tomoko Murakami 74
35 Energy Efficiency Improvement in the Transport Sector through Transport Improvement and Smart Community Development in the Urban Area Ed. Ichiro Kutani
76
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1The Mid Term Review (MTR) of the Implementation of the ASEAN Economic Community (AEC) Blueprint
Abstract
Mid-term Review of the ASEAN Economic Community (AEC) Blueprint covers the
four pillars of the AEC Blueprint on the following key measures:
1. Single Market and Production Base – Tariff, Non-Tariff Barriers, Trade Facilitation,
Standards & Conformance, Services, Investment, Labour and Agriculture
2. Highly Competitive Region – Competition Policy, IPR, Transport, ICT and Energy
3. Equitable Economic Development - SME development and Initiative on ASEAN
Integration
4. Full Integration into the Global Economy – FTA and CEP
For the analysis of performance, the implementation approach of the MTR project has
relied on the results of the AEC Scorecard Phase 2 (also being conducted by ERIA for the
ASEAN) and the questionnaires and interviews undertaken under the MTR project. For
outcomes, the project relies on both questionnaires and interviews in the MTR project and on
secondary data. For contribution to the economy, the MTR project has used three
computable general equilibrium models, one geographic simulation model, two gravity
equation models, and 2 industry cases/analyses for each ASEAN Member State.
Key Findings
The drive towards AEC 2015 is already contributing to the surge in foreign direct
investment to the ASEAN region drawing from the results of a questionnaire distributed by
ERIA to the private sector in the ASEAN. This is in part due to substantial achievements in
AEC measures already.
• Tariffs is a success story of political commitment for AMSs, with CEPT rates
virtually zero in ASEAN-6 and an average of only 2.6 % for the newer CLMV
countries in 2010. The impact of the CEPT reduction/elimination on intra-ASEAN
trade has been as expected; namely, a rise in share of ASEAN in the import sourcing
of AMSs and a geographic spreading of intra-ASEAN trade among AMSs beyond the
dominant Malaysia-Singapore trade of the early 1990s.
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• Trade facilitation is an emerging success story for ASEAN, with five (5) AMSs
having live implementation of National Single Windows (NSW) and a planned full
roll out to all the AMSs significant ports and airports and larger number of
government agencies connected to NSW by 2015. Two more AMSs are well
advanced in their NSW development while the last three remain committed to the live
implementation of NSW by 2015 albeit likely more modestly in light of the
tremendous technical, institutional, and regulatory advances that a fully functioning
NSW entails. The technical and legal foundations of the ASEAN Single Window,
arguably the world’s first regional single window, are also being set up for modest
live implementation by 2015.
• Investment liberalization commitments in the goods sector under the ASEAN
Comprehensive Investment Agreement (ACIA) are remarkably liberal in most AMSs,
using as yardstick a minimum of 70% allowable foreign equity. Although, there
remains room for further liberalization through a reduction in the number of industries
in the ACIA Reservations List.
• There are other more substantial achievements in the AEC Measures, such as the
implementation under ASEAN-X formula of the agreements under the Roadmap for
Integration of Air Travel Sector (RIATS), the signing and implementation of the five
ASEAN + 1 FTAs that cover all of the ASEAN + 6 partners, the signing and
implementation of the Chiang Mai Initiative, and the substantial number of regional
cooperation initiatives in many sectors such as agriculture, competition policy and
IPR.
Policy Recommendations
The Way Forward towards Beyond 2015
1. Address the NTB effects of NTMs Systematically: The ASEAN economic officials
themselves emphasized the importance of having a robust mechanism to address the
NTB effects of NTMs considering that there are legitimate reasons for the imposition
of a large number of NTMs. The MTR Report recommendations toward a robust
mechanism includes standstill on core NTMs, transparency, phase down of both core
NTMs and NTMs with substantial NTB effects, establishment of a third party
technical monitor and resource, and the strengthening of ACT.
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2. Trade, Investment and Transport Facilitation: Apart from the implementation and
continuous improvement of NSW and ASW, improved trade facilitation in the region
would call for the full implementation of the ASEAN Trade Repository (underpinned
by the national trade repository for each AMS) as well as setting and meeting targets
to reduce the number of days to import and export (with the implied streamlining of
processes as well as reduction in number of documents and rate of physical inspection
of imports). Similarly, improved investment facilitation calls for streamlining
processes (preferably with set targets) together with improved inter-agency
coordination and increased transparency during the pre-investment stage and
operational stage of the firms. The most important MTR recommendation toward
improved transport facilitation and connectivity within the region involves the full
implementation of the ASEAN transport agreements.
3. Forge ahead on liberalization: Although the private sector in the ASEAN puts AEC
liberalization measures well below facilitation measures in their priorities of AEC
measures for implementation by 2015, there cannot be deep ASEAN economic
integration without considerable liberalization. Thus, AMSs need to forge ahead at
further services and investment liberalization efforts toward 2015 given the time table
and flexibilities embedded in the current approaches. The MTR Report also proposes,
among others, that clear guidelines be set with respect to the inclusion of industries in
the “minimum” level under Category 2 of ACIA and recommends that domestic
regulations need be consistent with the liberalization program. Key recommendation
in trade in services include allowing for at least majority foreign ownership in much
of the services sectors of the AMSs and setting guidelines on what could not be
included in the 15% flexibility clause.
4. Enhance AEC Blueprint Third Pillar: ASEAN needs to have more concerted
regional efforts on SME development to give tangible expression to Pillar III of the
AEC Blueprint. This includes the implementation of a number of key initiatives of the
ASEAN SME Working Group through the ASEAN SME Strategic Plan and the
ASEAN SME Policy Index. Similarly, given the relatively favorable assessment of
the programs in the IAI by CLMV respondents, the MTR Report recommendations
include greater focus on projects that help the newer AMSs countries to meet their
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AEC obligations, greater coordination of projects in IAI and of Dialogue Partners, as
well as graduation of the successful newer AMSs from being recipients of to being a
partner-benefactor in the IAI.
5. Deepen ASEAN Integration with East Asia and Ensure ASEAN Centrality: The
challenge is in ensuring a “high quality” regional FTA within East Asia under RCEP.
The MTR Report presents specific recommendations toward this end, including
setting a 95 % tariff elimination target, adoption of a “common concessions”
approach as much as possible, deeper services liberalization, extensive use of co-
equal rules in rules of origin, and introduction of tangible and concrete trade
facilitation programs similar to ASEAN.
6. Build Building Blocks by 2015 for a Well Performing Single Market and
Production Base and a Fully Integrated, Competitive and Dynamic Economic
Community Beyond 2015: There is a substantial number of policy actions that can be
success stories and good building blocks by 2015 in the other AEC measures such as
standards and conformance, MRAs on professional services, capital market
development and financial integration, ICT, energy, competition policy, IPR, and
agriculture.
7. Address Institutional Issues and Undertake Concerted Regulatory Reform: Toward
a more effective implementation of the AEC Blueprint, the MTR Report emphasizes
the importance of strengthening the ASEAN Secretariat as a technical monitor and
resource, strengthened monitoring of AEC efforts including the institutionalization of
track 1.5 mechanism on AEC, deeper private sector involvement in AEC, more
effective dispute settlement system, and the complementary role of concerted
regulatory reform in AMSs.
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2 Explicating Jakarta Framework on Moving ASEAN and AEC Beyond 2015
(In Progress)
Abstract
This project is a follow up of the Jakarta Framework on Moving ASEAN forward toward
2015 and beyond, which was noted by the ASEAN Heads of State during the Bali ASEAN
Summit in 2011. As 2015 draws near and the implementation period for the Roadmap for an
ASEAN Community 2009-2015 finishes, the ASEAN Member States (AMSs) and ASEAN
would likely need to prepare the Blueprint for the ASEAN Community beyond 2015 (say,
2016-2022).
The Jakarta Framework was a product of collaboration between ERIA and the
Government of Indonesia. This project, on explicating the Jakarta Framework, is likewise
undertaken with the cooperation of the Government of Indonesia. The Jakarta Framework
presents the broad framework of pathways for moving ASEAN and AEC beyond 2015. There
is a need to explicate or elaborate further the inherently interdependent pathways that
characterize the Jakarta Framework. The explicated Framework can provide some basis for
the preparation of a Framework for the Action Agenda for Moving AEC and ASEAN Forward
Beyond 2015, which, hopefully, ERIA and the Government of Indonesia would give to
Myanmar government for the latter’s consideration as it prepares in 2014 the ASEAN Agenda
for AEC beyond 2015 (e.g., 2016 – 2022).
The thought or issues papers will be written by individual researchers. It is expected that
the papers will be presented to the public for discussion during a major ERIA-GoI
Symposium on Explicating the Jakarta Framework of Moving ASEAN and AEC Beyond
2015, as one of the major events commemorating the 5th anniversary of ERIA in early June
2013.
In summary, the project has the following objectives:
1. The Project elaborates on the Jakarta Framework that has been noted by ASEAN
Leaders in the 2010 Bali ASEAN Summit.
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2. The Project, through the integrative report of the project, provides elements of a
Framework for an ASEAN Agenda for Moving AEC and ASEAN forward beyond
2015, which will be presented by ERIA together with appropriate official (s) of the
government of Indonesia to the government of the Union of Myanmar for its
consideration as the latter prepares in 2014 an ASEAN Agenda on AEC beyond
2015 (e.g., 2016 _ 2022 (?)). In turn, the ASEAN Agenda on AEC beyond 2015
would be the basis for the preparation of the successor AEC Blueprint in 2015 under
the chairmanship of the government of Malaysia.
3. The Project’s Symposium will serve as the main public event of ERIA for its Fifth
Anniversary celebrations.
4. The Project’s papers together with the Integrative Report can help catalyze public
discussion and debate on the ways forward for ASEAN and AEC especially for the
next decade beyond 2015.
The main outputs of the Project are 39 individual papers and an Integrative Report. The
Integrative Report will include the proposed Framework for an ASEAN Agenda on moving
AEC and ASEAN forward beyond 2015.
The project will focus on issues surrounding the following themes:
1. Deepen AEC 2015 towards a single market and production base
2. Plug ASEAN firmly into the networked and innovation world future
3. Engendering an inclusive, resilient and green ASEAN
4. Raising ASEAN voice in global affairs
Finally, there will be an Integrative Report that attempts to tie everything together.
It is expected that the results of the project would provide significant inputs to AMSs as
they start deliberating and working on an agenda for the AEC and ASEAN for years beyond
2015.
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3AEC Scorecard Phase III- Towards Informed Regulatory Conversations and Improved Regulatory Regime: Logistics Sector and Trade Facilitation
(In Progress)
Abstract
The ASEAN Economic Community (AEC) Blueprint measures involve policy and
regulatory changes in ASEAN Member States (AMSs) that lead to the harmonization of rules
and regulations as well as standards, liberalization, and reduction in barriers, greater
transparency and/or rationalization of process, etc. Thus, the drive to AEC 2015 has the
corollary implication of policy and regulatory reform in AMSs.
The AEC Scorecard Phase III project has 4 key objectives. First is to contribute to
informed conversations on regulatory reform as well as improved regulatory coherence in the
ASEAN with special reference to logistics services sectors and trade facilitation. Second is to
contribute to ERIA Research Institute Network’s (RIN’s) capacity to support regulatory
reform in AMSs. Third is to contribute to the Brunei Darussalam’s initiative on regulatory
reform for ASEAN summits in 2013. Fourth is to strengthen, widen and deepen ERIA’s
monitoring efforts on AEC.
The AEC Scorecard Phase III project consists of two parts. Part One consists of the
following outline:
1. Overview of regulatory regime and evolution of regulatory reform in logistics sector
and trade facilitation.
2. Regulatory stock take and gap analysis on actual regulations versus “best practice”
regulations, preferably together with analysis of major constraints to implementing best
practice. The gap analysis will depend in part on the results of the questionnaires in Part
Two.
3. Case study of regulatory review and coherence. The components for the case study are
as follows:
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a. RIN will need to pick a service or activity under logistics and trade facilitation
sector.
b. Identify all the players involved in that activity.
c. Identify the regulations affecting the players.
d. For each regulation, the following questions need to be asked to the stakeholder:
i. What problem is this regulation supposed to solve?
ii. What are the objectives; are the current regulations actually delivering those
objectives?
iii. Is there a better way to address the problem and to reach the objectives, given
the country’s state of development?
4. The way forward to further improve regulatory reform, with special reference to logistics
sector and trade facilitation.
Part Two consists of estimation of expanded restrictiveness index using both border and
behind the border restrictions in the logistics sector and trade facilitation, and the analysis of
the impact of such restrictions on the economic performance of AMSs.
The final report of the project is expected to be finished and submitted to ASEAN
Secretariat in July 2013.
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4 Impact of Globalization on Labour Market Abstract
This study is fifth in the annual series of ERIA Microdata Research Project. The
objective of this project is to understand better the distributional effects of globalization and
the mechanisms by which they operate, utilizing firm- or plant-level micro data. Specifically,
this project aims to examine the effects of trade and FDI liberalization, trade (exports and
imports), international capital flows, outsourcing and traded intermediate goods on, in
particular, wage inequality and the relative demand for the skilled or educated workers.
The research seeks to answer a wide range of pertinent questions which form the
objective of the research, including- How did the skill premium (i.e., the difference in wages
between skilled and unskilled workers) change? What happened, in parallel, to the relative
employment of the skilled? What are the respective roles of supply and demand side factors
in these developments? Does trade liberalization increase wage inequality: aggregate, within-
industry across-firm and/or within-firm? What about the outsourcing and traded
intermediated inputs? What about exporting? Does the direction of trade matter? Does it
increase the relative demand for the skilled/educated or for specific occupations? What are
the mechanisms? Is there evidence that trade (or trade liberalization) interacts with skill
biased technological change (SBTC)? If so, what are the exact channels? What role does
innovation play? Does trade-induced “quality” upgrading of firms lead to higher demand for
skills? Is the increased demand for skills met by attracting new, better educated workers or
by increasing the productivity of the existing workforce? Are the effects different across
firms? Do firm productivity level (or distance to frontier) and exporting or importing status,
matter? Do domestic institutions (e.g., labor market restrictions) determine the distributional
effects of trade policy?
The findings of the studies under this research project reveals that adjustment to
globalization is not always straightforward and hence it could take some considerable time to
change a structure of an industry. There is also evidence suggesting that the adjustment
process may differ between countries, especially between developed and developing
countries
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5 ASEAN+1 FTA and Regional Comprehensive Economic Partnership (In Progress)
Abstract
The last two decades have witnessed how Free Trade Agreements have surged and
evolved in South East Asia, embracing the trading partners mainly in East Asia.
There has been a growing number of studies in accessing the impacts of FTAs on East
Asian countries with a particular attention to ASEAN countries, and most of studies claim
that FTAs have positive impacts on overall trading flows of not only member countries but
also non member countries and the rest of the world. However, only a limited number of
studies pay attention on the use of FTAs; how FTAs affect liberalisation in services and how
these affect productivity and investment; and moreover, how FTAs affect decision to invest
or relocate investment.
While the overall trade and investment performance of ASEAN have improved in recent
years, there is considerable room for further improvement of trade, services and investment,
particularly in trade and investment processes and procedures in individual countries in order
to optimize the use of regional cooperation. This leads to the question as to what kind of
government intervention or private sector’s involvement is required to optimize the use of
FTAs to improve overall welfare.
Moreover, after about two decades since the AFTA came into being, ASEAN has been
embracing ASEAN+n FTAs. While most of ASEAN+n FTAs have started to come into
effect since 1 January 2010, a new idea of developing a more integrated economic
cooperation has since been floated, which is now known as the Regional Comprehensive
Economic Partnership (RCEP). While the ASEAN countries have been actively engaged in
bilateral or multilateral trade agreements in the previous years; there is also the US which is
taking forward the Trans Pacific Partnership (TPP) in Asia Pacific. This besets the question
as to how RCEP will work along with other ASEAN+n FTAs; and how South East Asia and
East Asia will be integrated in the world economy in the coming decades.
In addressing these questions, this research project aims:
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• To provide rigorous evidence of the impacts of the current ASEAN+1 FTAs on trade
in goods, trade in services, investment and overall economic welfare
• To illustrate the effective use of FTAs as illustrated by the use of Certificates of
Origin (COOs) and how the use of FTAs affect decision of a country to conclude
more FTAs.
• To explain the constraints for using the existing FTAs and illustrate the interaction of
the implementation of bilateral and plurilateral (multiple) agreements at the same
time.
• To review the progress of the implementation of ASEAN+n FTA and how to move
forward the agenda toward RCEP as well as to provide inputs for policy interventions
to optimize the use of regional economic cooperation.
Value Added and Study Coverage
The main value added component of this study will be two fold. First, this study will be
supported by survey ‘On the use of FTAs’ which will be conducted in the 10 ASEAN
countries. Second, this will contain both rigorous analyses on the impact of ASEAN FTAs on
trade in goods, services, investment and overall economic welfare and comprehensive
thoughts on how ASEAN will move forward its integration.
The study will cover seven main issues:
1. Overview of Free Trade Agreements in ASEAN
2. a. The impact of ASEAN+1 FTAs on trade in goods by sub sector
b. On the use of ASEAN FTAs
3. How do FTAs affect productivity through liberalisation in services?
4. How do FTAs affect decision to invest or relocate investment?
5. The Impact of ASEAN+1 FTAs on economic welfare
6. A thought on RCEP: Its role and implications to the ASEAN economies
7. Lessons learned from other regional FTAs and economic integration: How to move
the agenda of ASEAN and East Asian integration?
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6 Coherence of Macroeconomic Policies in ASEAN Member States: Empirical Investigation of Experiences in 2000-2010
(In Progress)
Abstract
This study intends to make an empirical investigation as to whether and to what extent
ASEAN Member States practice coherent macroeconomic policies in pursuing the national
socio-economic development objectives as well as in response to external economic shocks.
Methodology and Estimation
The study consists of two major components of empirical investigation and has covered
the below listed results under the two components:
1. ASEAN Business Cycle and Economic Policy Linkage.
i. Review literature in estimating correlation using forecast error from Vector
Auto Regression Model
ii. Review literature in estimating dynamic correlation using Dynamic Conditional
Correlation GARCH Model
iii. Estimate interdependence of output growth and stock market between five AEC
countries (Thailand, Malaysia, Indonesia, Singapore, the Philippines), Japan,
China, South Korea and the U.S. using DCC-GARCH Model
iv. Evaluate trends of interdependence between countries using the data from
dynamic correlation. The results show that the degree of financial
interdependence continued to increase over time during the past decade. For
output growth, the study found only a temporary change in the dynamic
correlation in output in almost all cases. The increasing trends in the degree of
interdependence in real economy among AEC countries are not significant.
However, there is evidence of increase in degree of dynamic correlation
between some of AEC countries and the East Asian countries (China, Korea)
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2. ASEAN Responsiveness to External Shocks.
i. The VAR model for each country (including Indonesia, Malaysia, the
Philippines, Singapore, Thailand and Vietnam) has been set up.
ii. The initial set of data has been collected, as below:
- Quarterly government expenditure
- End of period exchange rate for each currency
- Policy interest rate and money supply (M 2 and M 3) in domestic
currency
- Growth of world GDP
- Growth of global trade
i.
ii.
iii. Cleaning up of data set by smoothing and seasonally adjusting
iv. Performing a unit root test for each endogenous variable
v. Performing the VAR model and impulse response analysis
The analytical models and preliminary findings were presented at the first meeting of this
project at TDRI on 28 February 2013.
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7 Automobile and its Part Manufacturing Industry in ASEAN and its Contribution to the Progress of Regional Integration
Abstract
This study examines the future of automobile and auto parts manufacturing industries
from the perspective of regional economic integration. Development of these industries in
ASEAN has been substantially affected by the economic integration efforts in ASEAN and
East Asia including BBC, AICO, AFTA-CEPT, and ATIGA. Lower barriers at the border
(especially tariff), facilitated transportation, together with growing incomes in the region,
have created globally competitive production bases for automobiles in ASEAN. However,
the level of development in automobile and auto parts industries differ from country to
country. The study addresses the following questions:
- How have national policies affected the development of Bangkok and Jakarta into
full-set industrial agglomeration?
- How does further integration including tariff elimination among ASEAN will affect
the future of Malaysia?
- Can the Philippines and Viet Nam create forge their own industrial agglomeration?
- How will economic integration within East Asia change the industry landscape?
This study covers recent developments in all the 10 ASEAN countries which include:
- Characteristics of the domestic market;
- Capacity of domestic manufacturing firms; changing characteristics of
manufacturing industries;
- Development of trade with ASEAN and East Asian countries; and recent policy
changes.
Policy recommendations will be made for each country.
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8 Moving toward a New Development Model for East Asia - the Role of Domestic Policy and Regional Cooperation
Abstract
The world is currently witnessing a major shift in the balance of economic and financial
power from the advanced industrialized countries to the emerging economies of Asia,
particularly from US-EU-Japan to China-India. Over the past two decades, East Asia has
become a growing force in global production, trade, investment and finance. And the region
will become the biggest stakeholder in an open trading system, a stable financial system, and
a sustainable environment. However, to realize the Asian Century scenario, the region must
tackle daunting policy, institutional and governance challenges. The Asian Century is
complicated by the less benign global economic environment, and domestic economic,
political and social constraints. The global environment holds trade imbalances, threats of
protectionism and the need to rebalance away from export-led growth towards domestic and
regional demand; there is international financial instability and volatility; and there is
increasing concern over food and energy security, climate change and environmental
deterioration and lack of sustainability.
In meeting the new challenges, East Asia should unequivocally support globalization,
oppose trade protectionism and promote the economic recovery process in developed
countries. East Asia is both a global dynamic production and processing base and the world’s
largest potential market. The regional integration process can tap an enormous internal
market potential in East Asia, making up for the lack of external demand. It can also improve
the export competitiveness of East Asia, and stabilize the foundation of the export strategy.
The developing economies of Asia are confronted by serious environmental problems that
threaten to undermine future growth, food security, and regional stability. They certainly will
not be solved by growth, but nor is “rebalancing” or moving to a “green growth” paradigm an
easy fix. Seven general principles may be useful across the board: a focus on co-benefits; an
emphasis on stakeholder participation; a commitment to scientific research; an emphasis on
long-term planning; pricing and broader economic reform; tackling corruption, in addition to
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generally bolstering institutional capacity with regard to environmental regulation; and a
strengthening of regional approaches and international support.
The big challenge facing many countries today is the growing imbalance between
economic development and social development, which causes the potential conflict and social
crisis, hampering development. In order to become more resilient, they need to spend more
on basic social services, social protection and basic infrastructure, as well as measures to
boost the income of the poor. It is crucial to promote intraregional trade and investment
flows that benefit the landlocked developing countries.
Major Findings and Recommendations
China
China has achieved rapid economic growth since the introduction of reform and the
opening up of the economy. However, China’s growth is increasingly constrained by rising
social and environment tensions. Faced with new challenges, China needs to search for a
new approach for development.
The key components of the new approach may include: a coordinated social and
economic development strategy, an innovation-cantered industrial restructuring strategy, a
consumption-cantered domestic growth strategy, a resource and environmentally sustainable
strategy, and a balanced external economic strategy. To turn to the new approach, China
needs to push reform further in key areas. Among other things, the role of government and
the way government runs the economy should be reformed; the new round of liberalization of
land and financial markets should be pursued; further state-owned enterprises (SOE) reform
is also needed.
India
India has emerged as a high-performing economy with a vibrant external sector and a
rapidly expanding domestic sector. There are, however, many issues which need to be
examined. Is the present development paradigm inclined towards export-led growth or
domestic demand-led growth? India has entered into the group of middle income countries,
and some of the advantages which India used to enjoy earlier as a low income country, are
likely gradually to be lost. This is amounts to loss of comparative advantage in both
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domestic production and export sectors. India retains, however, export competitiveness in a
large number of sectors of the world economy. It will continue to rely on an export-led
growth strategy as long as it has not fully exhausted its global competitiveness. India will
continue to focus on the simultaneous use of the key policies of domestic demand-led growth,
as well as export-led growth to shape its development strategy in the long run. This policy
mix would contribute to the integration of the Indian economy with the East Asia Summit
framework.
ASEAN
To realize the idea of inclusive development, both Indonesia and ASEAN as a whole
now are facing a new challenge, or have a new role to play, namely to promote high and
sustainable economic growth with high quality: growth which is environmentally friendly
and generates equal opportunities for all individuals in member countries. Indonesia must
improve the welfare of its people, enhance the justice sector, apply better governance, raise
the quality of democracy and improve the maintenance national unity and security. In
increasing regional economic cooperation, the role of ASEAN in realizing inclusive
development is to increase welfare for all members of communities in member countries, not
just to expand trade and investment activities and to achieve higher rates of national
economic growth.
Thailand is now facing many challenges. The first is to ensure that future growth will be
not too low compared to its past performance. Specifically, the country needs to escape from
the middle-income trap, in which it seems already to have been struggling for more than a
decade. One of the causes of this recent slow economic growth is the country’s low
resilience to economic crises, both home-grown and imported. On the social front the
country does quite well in many areas and can claim to have achieved a satisfactory level of
economic-social development balance. These areas include the alleviation of poverty, basic
and advanced health-care and basic education. There are, however, some social areas
showing significant development delay. Economic and social inequality stands as a top
priority problem for the country. Environmental sustainability is also problematic. The
quality of human capital is also lagging, as indicated by the low performance of the education
system and labour skills training. The three fundamental problems hindering the
development of a more balanced society in Thailand (human development, unequal society,
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and environmental challenges) can only be overcome with strong institutions, as they are
problems that cannot be entirely dealt with using market mechanisms. However, to realize its
potential the country needs strong economic and social institutions that would steer the
politicians to a more balanced, productive and sustainable path of future economic and social
development.
To achieve more inclusive growth and sustainable development, and narrow the
development divide in ASEAN and East Asia, the CLMVs, their private sectors and
development partners must focus on: hard and soft infrastructure for connectivity; economic
diversification and private sector development; agricultural development, diversification and
productivity; trade, transport and investment facilitation; regional integration and the capacity
to implement domestic policy for the cross-border movement of goods, services and people,
particularly education and skills development responsive to the labour market; institutional
strengthening and governance; aid effectiveness and graduation from aid dependency.
CLMVs need to focus on the following reform policies for regional economic convergence
and cohesion; human capital formation; a conducive investment climate and sound
macroeconomic fundamentals; distribution of land ownership and mitigation of asset
inequality.
East Asia Community
After the global financial crisis and the European fiscal crisis, East Asia is expected to
become the engine of growth for the world economy. In order to meet such high
expectations, East Asia should maintain its economic dynamism by raising its economic
efficiency as well as by enlarging its internal market. In order to realize a region-wide FTA
in East Asia, East Asian countries need to overcome existing obstacles and meet the new
challenges.
Considering the great need for restructuring the economic development model, it is
highly desirable that East Asia moves from an FTA/CEP to an economic community. This
seems possible since ASEAN will realize its Community by 2015 and the negotiation on a
broad regionally based FTA/CEP will also be completed. An East Asia Economic
Community will be helpful for policy coordination and cooperation on stimulating regional
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demand, and moving toward a social-economic balanced development structure. Within a
Community, the institutions could be more effective in regional economic governance.
Regional Production Networks
East Asia’s economies have benefitted from the regional production networks. It is
strongly connected to the outside economies through the production networks, in addition to
the countries in the region. There is a big challenge, whether each economy in East Asia can
implement the necessary strategies and policies, depending on its stage of development and
involvement in the production networks.
To further utilize the mechanics of production networks, development strategies and
industrial policies have to be considered together. For instance, innovation in industrial
agglomeration is necessary. Small and medium sized enterprises (SMEs) should play an
important role in forming industrial agglomerations, and thus SME-related policies must be
reviewed; better access to technology, better access to finance, fostering human resources,
and establishing industrial organization may be helpful for their involvement in the industrial
agglomeration. It is also important to identify and resolve bottlenecks that prevent
participation in production networks. International connectivity and new business models
need to be considered, particularly to further deepen the regional production networks.
Green Economy
Moving toward a new and sustainable development mode, it is necessary to build a
recycling society. The sluggish recovery from the global financial crisis of 2008 in affluent
markets has affected exporting countries, and prompted consideration of ways to increase
domestic demand. Mining the waste stream for recyclable materials offers prospects of both
stimulating domestic activity and securing supplies of some rare and expensive materials.
The experience of New Zealand in evolving waste management and recycling policy over
recent decades, primarily for the purposes of environmental improvement provides a valuable
model for moving toward a sustainable future. Institutional changes in both general
legislation and specific waste policy have contributed to reductions in waste disposal, but the
economic stimulation is more difficult to measure and has probably been rather small. There
are complementary roles to be played by small consumer markets and larger producing
countries in the effective recycling of materials across the region.
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9 Geographical Simulation Analyses for Eliminating the Infrastructure Bottlenecks towards Balanced Growth in East Asia
Abstract
ERIA and IDE-JETRO have been developing Geographical Simulation Model (GSM)
since 2007, and now GSM has become a useful tool of policy analysis. Using this tool, it is
now possible to predict what kind of physical or institutional integration has positive/negative
impacts on a given region at the sub national level. It is also possible to lay down policy
measures to facilitate international transaction which affects the traffic on different routes.
This is done by predicting the possible bottlenecks in the route.
Methodology
- In the analyses conducted in FY2012, the geographical coverage was extended to the
world to make this analysis more reliable.
- The simulation incorporated 80 major countries all over the world into the model.
World coverage of the model in terms of GDP improved from 81.9% to 93.9%. In
addition, routes and logistics data were refined in line with the real condition.
- The specifications for Roll-on/Roll-off mode and ‘cargo only’ mode were improved.
- Tariffs and Non-Tariff Barriers are set in the baseline scenario in accordance with
actual FTA/EPA schedule.
Using these, more complex scenarios can be run, such as impacts of disasters, SEZ
development, tariff reductions and combinations of those measures or incidents. This
IDE/ERIA-GSM 6.0 study aims to improve upon the previous versions of IDE/ERIA-GSM
and to study the development related policies in the East Asia region.
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10 Innovation Between and Within Supply Chain: Empirical Study of Tracing Local and Global Production Knowledge Network in East Asia
Abstract
The motivation of this project is to answer the research question on what really drives
product and process innovation. Product and process innovation may happen in customer-
supplier interactions along a supply chain. Since manufacturing processes has been
fragmented and extended globally, product and process innovation might happen across firms
in developed and developing countries like ASEAN countries. The main objectives of the
research project are twofold:
1. To measure causal impacts of organizational capacity and inter-firm learning on
performances of local firm (especially small and medium firm), and
2. To better understand why many firms are not involved in global supply chains (GSCs)
and what can be done to promote them entering into GSCs.
A twofold approach has been used to address the research objectives:
I. To conduct large-scale surveys in Indonesia, the Philippines, Thailand and Vietnam and
develop longitudinal data at least for the Philippines to:
- estimate the causal effect of organizational capacity and inter-firm learning on firm
performance, and
- examine the mechanism of network evolution
I.
II. To conduct detailed industry-specific case studies to
- understand why few local firms can transact with foreign firms in developing
economies
- discuss what can be done to accelerate the entry into production processes within a
global supply chain, and
- consider industry characteristics.
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11 Towards Competitive and Innovative ASEAN SMEs: ASEAN SME Policy Index 2012 Abstract
The Framework for ASEAN SME Policy Index prepared by ERIA follows the approach
of the OECD SME Policy Index; that is, the Index is composed of a number of policy
dimensions, each of which is subdivided into a number of sub-dimensions. Each sub-
dimension is in turn composed of a number of indicators. Finally, each indicator will have a
number of levels of policy reform or a set of policy reforms.
What would differentiate the ASEAN SME Policy Index from the OECD SME Policy
Index is that the policy dimensions, sub-dimensions, indicators and levels of policy reform
need to reflect more the specific circumstances of the ASEAN region and hence may differ
somewhat from the details of the OECD SME Policy Index.
The list of the policy dimensions is based on the ASEAN SME Blueprint, the Strategic
Plan, and the OECD. The following is a list of 8 policy dimensions, proposed for the ASEAN
Policy Index after rigorous discussions and consultations with experts, stakeholders, and
concerned government and ASEAN officials:
1. Institutional framework;
2. Access to support services;
3. Cheaper and faster start-up and better legislation and regulation for SMEs;
4. Access to finance;
5. Technology and technology transfer;
6. International market expansion;
7. Promotion of entrepreneurial education; and
8. More effective representation of SMEs’ interests.
The elaboration of the list of sub-dimensions, indicator and levels of policy reform has
been drawn from the inputs from experts, stakeholders, and concerned government and
ASEAN officials.
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12 Global Production Networks and Host-Site Industrial Upgrading: Evidence from Car, Clothes and Semiconductor Firms in Southeast Asia and China
(In Progress)
Abstract
This project seeks to expound the critical concepts, review the main arguments, and
establishes firm-level benchmarks and dynamics to examine regional production (domestic)
linkages, host-site institutional support under which host-site small and medium enterprises
(SMEs) appropriate the most technological synergies from the operations of multinational
corporations (MNCs) with a focus on ASEAN and China.
Industry and Country Coverage
The automotives, clothing and semiconductors industries have been identified to be
suitable as there is evidence of strong regional production linkages and the industries are
important for the respective countries.
Automotives are one of the main industries characterized by production tiering and
linkages, while semiconductors and clothing have dominated the internationalization of
production. China was included for all three industries because of the significance of exports.
Automotives were also chosen for Indonesia, Philippines, Thailand and Vietnam.
Automotives had already become important in Indonesia, Philippines and Thailand; it has
started to grow rapidly in Vietnam since 2000. Clothing was also chosen for Cambodia, Laos
and Myanmar as the industry figured prominently in national exports. Electronics
components were also chosen for Malaysia, Philippines, Singapore and Thailand because of
the importance of the industry to their exports.
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13 Public Private Partnership in ASEAN Member Countries Phase 2: Institutional Assessment to Develop Public Private Partnership System in Cambodia, Lao PDR and Myanmar
Abstract
This project is a follow-up to the previous research project on “The Role of PPP in
ASEAN” which emphasized on mapping the historical and current situation of PPP
implementation in 5 ASEAN member countries (i.e. Indonesia, Malaysia, Philippines,
Thailand, and Vietnam).
In the previous project, the Cambodia, Laos, and Myanmar (CLM) were purposely not
included in the scope. CLM have been known to possess the problem of lack of
infrastructure, at the level and scale more massive than other ASEAN member countries.
Further, the institutional capacities of CLM indicate that it takes some time for them to take
non-conventional measures, including PPP, to solve their infrastructure problem.
Implementation of a PPP system requires an existing set of precluding systems. The
establishment of a PPP system itself requires several stages to be completed—to wit, the
government should: determine the problems to be addressed by PPP scheme; formulate the
objectives of PPP; assess the prerequisites and requirements; establish the system; monitor
and evaluate. Accordingly, the objectives of this research are:
1. To assess the areas where PPP scheme can fit. 2. To examine the CLM’s current positions in readiness for adopting PPP scheme. 3. To suggest the steps to be taken. 4. To show examples of potential PPP projects in respective countries
The methodology of this project is a combination of examining best practices from PPP-
experienced countries and checking the reality at ground level. The working team consists of
two national researchers from each country teamed up with one international consultant for
each country, making the total working group members six. As the first step, the country
teams identify the current situation of infrastructure development and relate it with existing
forms of public-private cooperation. Next, a gap analysis will be made to prepare the
establishment of PPP unit in the countries.
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14 Enhancing Supply Chain Connectivity and Competitiveness of ASEAN Agriculture Products: Identifying Chokepoints and Opportunities for Improvement
(In Progress)
Abstract
Agriculture is a very important sector for the ASEAN region. One of the major strategic
approaches adopted by the ASEAN Member States under the AEC Blueprint is to “enhance
intra-and extra-ASEAN trade and long term competitiveness of ASEAN’s food, agriculture
and forestry products/commodities.” The action points indicated in the AEC Blueprint are
related mainly to production practices, SPS and certification in addition to the monitoring of
the CEPT-AFTA scheme for agriculture (and forestry) products.
The Mid Term Review of the AEC Blueprint has revealed that nontariff measures
(NTMs) are increasing in policy concern in view of the significant reduction and elimination
of agriculture products. Moreover, the Report brings out the importance of trade facilitation,
infrastructure and logistics to have a more integrated, and hence more competitive, ASEAN.
In this background, this Study attempts to contribute to the drive of ASEAN towards an
integrated economic region as expressed in the AEC goal of a ‘single production base’.
Specifically, the project examines critical “choke points” in the supply chain of agricultural
products within AMSs and the whole ASEAN region. The choke points tend to be policy and
institutional constraints. The main objective of the study is to help improve the movement of
goods from farm to firms and consumers, domestically and regionally; thereby moving
towards a single production base in agricultural products in the ASEAN region.
The Study draws heavily in approach from the USC study on APEC Supply Chains:
Identifying Opportunities for Improvement for the APEC Business Advisory Council, but
modified to focus more on ASEAN agriculture. The Study will consist of both regional and
national level analyses. At the national level, the choke points are examined in terms of a
supply chain (or production network) of two selected commodity groups that are of interest to
the ASEAN region. At the regional level, the determination of the significant chokepoints
that deter increased intra-ASEAN agricultural trade relies on broader factors affecting trade
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across countries. The regional and national level analyses are complementary because the
broad factors that shape intra-regional trade are largely national in character. The Study relies
substantially on country case analysis of the supply chain and major choke points of the two
selected commodity chains for each country. The examination of the major choke points will
provide the basis for the specific recommendations.
The project will consist of a country study for each of ASEAN-8 (excluding Singapore
and Brunei Darussalam), three thematic papers at the regional level, and an integrative paper.
The component papers and topics are both at the regional level and at the national level.
The following are the component papers and major topics:
I. Regional level analysis: Towards Enhanced Regional Supply Chain Connectivity in Agriculture Products
A. Evolution of intra-ASEAN trade in agriculture products: any indication of value
chain or production networks at work at the ASEAN level?
B. Identifying Chokepoints to increased ASEAN agricultural trade and supply chain
C. Addressing Non-Tariff Barriers to ASEAN agricultural trade and supply chain.
II. National level analysis: Understanding and Addressing Domestic Major Choke Points in the Supply
Chain of Agriculture Products at the National Level
A. Description of the selected commodity (group) and its supply chain processes.
B. Determination of relative importance of choke points in the supply chain of the
two selected commodity groups.
C. Analysis of policy, regulatory and institutional issues affecting major internal
choke points in the agricultural supply chain of the two selected commodity
groups.
D. Towards enhanced supply chain connectivity domestically and internationally:
Some recommendations.
III. Choice of the two Commodity Groups For the Study, the two commodity groups chosen are the following:
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1. Animal/vegetable fats and oils, etc (HS 15); and
2. Fish and crustacean, molluscs, and other aquatic invertebrates (HS 3)
Both commodity groups are important for intra-ASEAN agricultural trade, bannered by
the most important group (HS 15). ASEAN is a global leader in one (HS 15) and a significant
global player in the other (HS 3). Sanitary and phyto-sanitary measures, as well as the issues
of certification and more complex trade facilitation, are very important in at least in one
commodity group (HS 3).
Study Methodology
A. Country Papers: Each country study will undertake surveys and interviews of key
informants from associations, transport and logistics service providers, and other private
stakeholders involved in the supply chain to determine the relative importance of the various
major choke points in the supply chain of the two selected commodity. Concerned
government officials will also be surveyed and/or interviewed in order to capture the policy,
regulatory, and institutional issues affecting the supply chain. ERIA will develop the detailed
questionnaire.
B. Regional Papers
For the regional papers, the structured questionnaires are expected to be distributed and then
gathered through the ASEC with the support of SOM-AMAF.
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15 Intellectual Property Policy for SME Development: Japanese Cases and Lessons to ASEAN
Abstract
This study was requested by the ASEAN-Japan Heads of Intellectual Property Offices
(IPOs) to examine the SMEs’ IPR utilization and supporting policy measures in Japan. This
study also analyzes the IPR environment in four ASEAN countries (namely, Indonesia,
Malaysia, Thailand and Viet Nam) through interviews of the government officials, SME
associations, and SMEs who are currently utilizing or have the potential to utilize IPRs, as
well as using available statistics.
The Japan Model
Japanese SMEs have steadily contributed to roughly half of GDP in the manufacturing
sector. However, the productivity of these SMEs varies: some SMEs are highly productive
while others are not. Technology innovation takes place in these highly productive firms.
Therefore, Japanese SMEs recognize that their technology advancement and R&D as well as
brand development is their priority strategic areas in 2012. Japanese SMEs’ share in IPR
utilization (e.g., application and registration) is much higher than those in the ASEAN
countries. In Japan, for example, SMEs apply for 10% of patents, 30% of industrial designs,
and 40% of trademarks.
However, SMEs in Japan face many challenges in fully utilizing IPRs. Their awareness
of IPRs are relatively low compared with larger firms. SMEs have limited budget, limited
human resources, limited technology access, and limited access to IPR information which
provides basis for considering new inventions, new designs and new brands. Many SMEs
lack successful experiences in utilizing IPRs. To ease these challenges, Japanese government
provides a number of policy measures. For instance, SMEs can enjoy expedited examination
for their applications. This is important when SMEs need to use the IPRs for the promotion
of their new products. Also, with rights granted by the government, they can start negotiating
licensing contracts even if they do not have sufficient production capacity. SMEs can also
enjoy discounts for application fee and registration fee when they meet certain thresholds.
Japanese banks also consider IPRs in credit rating of firms (including government banks’ IP-
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collateral loans). SMEs in rural areas can approach their prefectural governments for the IPR
one-stop counters which provide basic consultation of IPR utilization for free. Japanese
government develops an open database to facilitate licensing contracts which are an
important source of technology access for SMEs who do not have their own capacity to
invent. The national IPR strategy is updated every year. Some prefectural governments
adopt this national strategy to the local level and create their own IPR strategies. While the
attribution is hard to determine because many other factors are also involved (e.g., business
strategy, macroeconomic situation), usage of expedited examination has significant
contribution to the success of SMEs. Also, local prefectures with local IPR strategies have
increased the usage of IPRs in their respective territories more than those who do not have
ones. Finally, Japan Patent Office publishes every year a book on SMEs’ success in IPR
utilization. This book covers 50 success stories from across the country, covering patents,
industrial designs, and trademarks. Those SMEs include a micro firms with less than 10
employees yet succeed in marketing their products overseas by protecting their rights as
IPRs.
The ASEAN Scenario
Overall, SMEs in ASEAN contribute smaller share of GDP. ASEAN also has much
limited utilization of IPRs. To begin with, the four countries examined in this study do not
have official statistics on SMEs. Judging from the numbers of resident applications
(including large and small firms as well as MNCs’ local subsidiaries), ASEAN has much
lower utilization of IPRs than Japan. However, there are success stories of SMEs in all the
four ASEAN countries covered in this study. In general, SMEs do not recognize values of
IPRs and hence perceive that IPRs are irrelevant to them. In some cases, SMEs believe that
exclusive nature of IRPs do not match the culture - because SMEs help each other in coming
up with new designs, the new designs should not be exclusively owned by a designer. IPRs
can be collectively shared by those who contributed to design creation but such aspect is not
recognized. As a result, some of these SMEs start to suffer from lack of IPR registration -
e.g., their designs are registered in foreign countries and thus their products cannot enter the
markets.
ASEAN countries also provide policy measures to enhance IPR utilization by local
firms, but the details vary from country to country. Compared with Japan, policy measures in
ASEAN are less comprehensive. For example, despite an expedited examination procedure,
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being an SME per se does not fulfill the requirement in the four ASEAN countries and hence
SMEs need to prepare documents to prove eligibility (e.g., their rights are being infringed).
Also, SMEs who want to enjoy this special procedure have to pay extra fee which may
practically prevent SMEs from using such mechanism.
Major Recommendations
The project which consists of members from Indonesia, Malaysia, Thailand and Viet Nam
has recommended the following measures for initial consideration by the governments:
1) Design national IP master plan (with high-level political commitment)
2) Promote success stories in IPR utilization (e.g., collect real stories from the country or
other countries at similar development stages and communicate them with public)
3) Develop SME-statistics on IPRs as the basis of policy discussion
4) Introduce expedited examination for SMEs (possibly with free of charge); and
5) Strengthen regional IP supports
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16 Development Potential of Content Industry in East Asia and ASEAN
Abstract
To support the establishment of the ASEAN Community by 2015 and the economic
integration in East Asia, it is important to strengthen economic partnerships and to foster a
community through common social and cultural infrastructure. Cross cultural connections
through TV, movies, and tourism will contribute to the strengthening of people-to-people
connectivity. Sharing good quality “content” (e.g. music, movies) created in Asia can also be
an important connectivity tool.
The average market size of the content industry in Asia in 2009, except for Japan, China,
Korea and India, was 4.5 billion dollars (all the countries of ASEAN). The rate of increase in
the content industry between 2009 and 2014 is expected to be about 160% in Indonesia and
about 140% in Malaysia/Thailand compared to about 120% in the US.
With an increase in the viewing rate of video content via satellite or the internet along
with penetration of highly functional devices like smart-phones, new businesses using video
content are expected to grow in Asia in the future. The impact of video content on people and
industries via TV or the internet will be significant. Video contents (characters from
animation or movies) directly affect manufacturing industries, especially automobile and
fashion industries and service industries including food and tourism industries. In particular,
the content industry will actively promote employment creation in Asia and export expansion
to the US and Europe due to its labor-intensive processes and close connect to tourism.
The objective of this Project is to set the direction for further promotion of the content
industry by examining the increased demand and also analyzing the economic effects
(employment creation effects and ripple effects on supporting industries, etc.) in the entire
industry of Asia. Moreover, measures for strengthening of the value chain in Asia will be
examined for further promotion of economic cooperation within the region. As one of the
specific strategies, the effects of a “platform” for the promotion of content distribution will be
reviewed.
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The market size (demand expansion prospects), employment creation effects, and ripple
effects on supporting industries of the content industry in Asia as a whole will be analyzed
through exchange of opinions among the stakeholders, namely government, industry and
academia. Based on this analysis specific measures for the promotion of the content industry
will be examined. The study will also examine the effects of platform for the promotion of
content distribution and make policy recommendations for productivity improvements in
entire Asia.
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17 Standard Distribution Infrastructure for Consumers in the East Asia Region in the Field of Consumer Goods Distribution for Retailers and Wholesalers
Abstract
In order to reinforce economic connectivity, consumer goods distribution can be viewed
as part of efforts to alleviate the gap of distribution infrastructure across countries in South
East Asia. The important factors that are considered related to connectivity are:
1. Keeping consistency among each nation’s public policy for distribution
2. Establishing standard distribution infrastructure (software and hardware) among the
East Asia region, including “security of the consistency of the circulation policy of
each country” and “establishment of the circulation base common throughout the
level”.
The expected deliverables are:
a. The roadmap of policy to reinforce the East-Asia economic connectivity depending
on the degree of distribution infrastructure development in each nation.
b. The standardization roadmap for distribution infrastructure which has consistency
with distribution policy of each nation.
Methodology
The study group consists of researchers from Japan, Indonesia, Malaysia, Singapore,
Thailand, and Vietnam. The project is conducted in the two steps for each factor
abovementioned. First, the study group conducts an analysis of current status and extract the
issues to be addressed. Second, the group discusses and develops the roadmap. For the
consistency aspect, the group collects and analyses current regulatory framework, current
physical and institutional connectivity among the countries. Further, the group will develop
roadmap aligned to the medium and long term growth strategy for each nation. As for
establishing standard distribution infrastructure, the study group will define the target field
and current status of standardization, and set up the framework for further investigating the
roadmap to promote standardization.
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Major Findings and Policy Implications
Ensuring Food Safety
Important policies to enhance food safety from the viewpoint of the consumer-goods
distribution field would be: 1) regional harmonization of standards of the quality of goods
throughout the supply chain of foods for preventing their deterioration; and "2) development
and dissemination of a system and technical standards on the traceability of foods in the
supply chain (manufacturers, wholesalers, retailers) within a country and among countries in
the region.
Consumer Protection
While ensuring food safety, it is necessary to consider consumers' right to obtain
information on safety and quality of food. There is a variation of enforcement levels in the
consumer protection in the East-Asia region.
It is therefore important to refer to the advanced system in development countries, and
introduce and implement them in countries which are lagging in consumer protection. This
will also require harmonisation of institutional requirements on consumer protection.
Supply-Chain Cost Reduction
Major cost issues pertaining to supply-chains can be divided into two: 1) Cost of
transport, warehouse expense, and various costs which suppliers pay to retailers like returned-
goods expense or sales promotion supporting fee, rebate; and 2) The foods disposal cost
which arises due to inefficiency of a supply chain.
Physical distribution expense or foods abandonment loss are comparatively high in less
developed countries within the region. As institutional solutions for increasing efficiency of
a supply chain through reduction of such costs, the following policies are suggested to be
implemented in East-Asia region.
- Ease regulations on foreign-capital companies in distribution industry while conducting
training of SMEs in the consumer-goods distribution field and accelerate economical
exchange within the region by introducing the know-how of advanced distribution
industry.
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- Enhance capabilities of standardization organization to promote implementation of ICT
standards (product ID, electronic commerce, etc.), which help to increase efficiency of
supply chain.
Training of Small and Medium Sized Enterprises in the Consumer Goods Distribution
Field
The rate of SMEs occupying the consumer-goods distribution field in East-Asia region is
still high (40 to 60% in sales, and 80 to 90% in the number of companies). The number of
employers is also high. Though the advanced know-how of foreign-capital companies in
distribution industry is there, it is important to raise and develop SME distribution industries
in the region for industrial prosperity and secure employment.
For institutional solutions for advancing SME distribution industry, the following policies
are suggested to be implemented in East-Asia region.
- Harmonization of standards of human resources in East-Asia, which complements the
training of human resource of SMEs in distribution industries.
- Facilitate implementation of efficient business operations by convenience store chains in
distribution industries.
- Develop a business environment where SME distribution industries can use low-cost
ICT based on global standards.
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18 Myanmar Comprehensive Development Vision (In Progress)
Abstract
As the Comprehensive Asia Development Plan (CADP) and CADP 2 stated, Myanmar
has long been the weakest link in the region in spite of its huge potential and strategic
location. However, the Myanmar government has now inaugurated the wide-ranging reforms
in both economic and political arenas. The government has improved monetary and fiscal
management, facilitated trade and foreign direct investment (FDI), and started to build
physical, legal and institutional infrastructure. In June 2012, Myanmar entered into the
second phase of reform strategy, which focused on economic development. The government
has drawn up the five-year short-term National Plan (FY2011-FY2015) and submitted it to
the Parliament. The Myanmar government targets a 1.7-fold rise in per capita GDP during
the National Plan. The government has announced four economic policies, that is, (1)
Sustaining agriculture development towards industrialization and all round development; (2)
balanced and proportionate development among states and regions; (3) inclusive growth for
entire population; and (4) Quality of statistics and statistical systems.
Given its rich endowment of resources including diligent and literate sixty-million
population and rich investment opportunities in a range of sectors, the prospects for
Myanmar's high growth are many. To realise this, Republic of the Union of Myanmar
Government and Economic Research Institute for ASEAN and East Asia (ERIA) have jointly
initiated a joint exercise, Myanmar Comprehensive Development Vision (MCDV). Objective
of the exercise is to deliver a sectoral vision plan which would be instrumental in bringing
economic prosperity to Myanmar and the Mekong Region as a whole, so that Myanmar could
be the next engine of ASEAN economic growth and Asian economic growth. MCDV seeks
to lay down growth and development strategies which are, 1) People-centered, 2) High-
growth & Globally Linked, 3) Inclusive & Balanced, 4) Green & Sustainable for the relevant
policy areas and sectors.
The MCDV will consist of 16 development plans for the following sectors, including the
subsets of the plan (shown in the parentheses):
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1. Concept of MCDV (Current Status, Future Vision and Growth Plans)
2. Supporting Policy (Monetary, Fiscal, Financial, Trade, Investment and Labour Policy)
3. Agriculture Sector Development (Main Agriculture, Cropping, Fisheries and
Livestock)
4. Industry Sector Development (Labour Intensive and Export Oriented, Domestic and
Heavy Industry; SME Development; Human Resource Development for Industrial
Sector)
5. Natural Resource Sector Development (Mining, Oil and Gas, Forestry)
6. Service Sector (Tourism and Tourism Retirement Business, Logistics, IT
Outsourcing, BPO and Call Centers
7. Economic Infrastructure Development (Road, Rail, Water and Air Transport,
Communication, Electric Power, Industrial Estate and SEZ)
8. Integrated Energy Development
9. Financing Mechanism
10. Legal Framework
11. Development Governance
12. Rural Development and Poverty Reduction (Microfinance)
13. Environmental Preservation
14. Disaster Management
15. Sub-National Development (Regional Development Strategy for Seven Regions,
Regional Development Strategy for Seven States, Border Area Development
Including Job Creation Schemes, Economic Corridors)
16. Growth Poles (Greater Yangon - including Thilawa SEZ, Greater Mandalay
Working Groups consisting of researchers, consultants and resource persons from related
departments have been created for each sectoral plan.
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19 Rule Making Features of New Trade Agreements and Role of Services (ERIA-CSIS Project)
(In Progress)
Abstract
This research project is conceptualized under the capacity building activity for for local think
tanks. The study examines political economy features of the implementation of ASEAN Economic
Blueprint (AEC), with focus on international rule-making aspects of the roadmap and how it
influence domestic regulatory process in Indonesia and to increase public awareness in Indonesia on
ASEAN and other international economic cooperation.
The study has three main components: (i) analytical and field studies, (ii) public awareness-
raising, and (iii) capacity building of CSIS researchers and wider stakeholders.
Analytical and Field Studies
Analytical and field studies conducted by CSIS focus on how Indonesia should respond to the
implementation of integration initiatives in the AEC Blueprint and other regional FTAs, in particular
on the aspect of international regulatory harmonization, as well as increasing the country’s
competitiveness in order to realize benefits from deeper integration.
Two studies are being conducted under this component:
1. New Rule-Making Features of New Trade Agreements
This first study focuses on examining the rule-making features of the new type of trade agreements,
the so-called 21st century trade agreement. As ASEAN integration gets deeper involving many
behind-border measures, the efforts toward more harmonized domestic regulations become more
important. Other trade agreements formed by Indonesia and its trading partners also cover many
provisions that need to align domestic regulatory framework to international best practice. This will
create new political-economy pressure on the domestic rule-making process in Indonesia.
Decentralization and delegation of various regulatory processes to sub-national level make the
harmonization efforts more difficult.
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This study will look at the dynamic of this political-economy process of aligning domestic
regulations to the international best practice, in particular with relation to the realization of ASEAN
Economic Community. The assessment relies on the comparison of various official rules and
regulations as well as current implementation regime. The study would come up with some
indicators on how well a certain policy area fit into the international practice and in what way the
related regulations can be improved. It will also examine possible policy areas where problems and
challenges are likely to occur, in addition to the identification of possible sources of problems.
II. Indonesia’s Services Sectors: The Key to Global Production Network and Employment
Opportunities
The emergence of global production network required efficient and reliable services sectors to
facilitate and link production process. Competitive services matter for productivity, as services are
intermediate input for producing goods and services. In Indonesia, however, services industry as a
whole has not received the attention it deserves. While some sectors, most notable finance and
telecommunications, have experienced significant development in the past two decades, other
services such as health, air-cargo, express courier, domestic sea transport, and those in the business
services sector are relatively small and underdeveloped.
The second study will examine problem found in Indonesia’s service sectors and how trade
liberalization and regulatory reform in services would help in creating more efficient and reliable
services. It also examines the impact of trade liberalization in services on the employment situation
in Indonesia. While the study relies on examination of various indicators and related data, both
secondary and field interviews, some modeling-based analysis might be conducted to see the impact
of reform in service sectors.
Public-Awareness Raising Activities
Several activities will be conducted to increase public-awareness on ASEAN, as well as its
impact to Indonesian economy and the future formation of the economic community. The activities
comprise of a series of public seminar in Jakarta and two other big cities, stake-holders’ discussion
in Jakarta and distribution of briefs and research papers, both in hardcopies format and electronic
format which will be published on the CSIS website.
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Better public understanding of ASEAN and East Asia integration process would determine the
future of successful integration process in the region. Unfortunately, public awareness on various
issues related to ASEAN and regional integration is still very low. General public does not have
sufficient information about the ongoing process and many important stakeholders have little idea
about the impact of such moves.
The purpose of these activities is to provide better information on the current state of regional
integration among East Asian countries, and how it would affect Indonesia’s Economy. Seminars,
conducted in several big cities, would aim to raise public awareness on the recent ASEAN
integration plan as well as other trade related initiatives in the region. Smaller discussions intended
to provide better understanding to specific stakeholders, such as private sectors and NGOs, will also
be held. Printed and electronic publications are aimed at reaching wider coverage.
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20 Management of Community Preparedness for Disasters: ASEAN Perspective
(In Progress)
Abstract
A series of catastrophes in recent decades have called for better preparedness in disaster-
prone countries. In the last decade alone, the combined major natural disasters in Asia-
Pacific, namely the 2004 Indian Ocean tsunami, 2008 Cyclone Nargis, and 2011 Tohoku
earthquake & tsunami have caused 780,246 deaths with at least US$ 250 billion loss. The fact
is even more devastating when accompanied with the findings that the vulnerabilities differ
among socio-economic groups. The Asia-Pacific Disaster Report 2012 by United Nations
concludes that whereas Asia-Pacific continent is the one most-prone to natural disasters, its
preparedness still has a large room for improvement--particularly on harnessing the economic
impact of the disaster.
This project run by ERIA is a support for serious endeavor of Asian nations to be better
prepared in responding to natural disaster. It focuses on the methodology of impact
assessment, the cases for impact on poor households, and on disaster-linked financial
instruments.
Objectives:
1. To explore the methodology to estimate the economic impact of natural disaster
and its distribution.
2. To examine the impact of natural disaster on household welfare.
3. To review current insurance system on natural disaster and propose the
improvement for ASEAN.
The Project is conducted by a Working Group on Disaster Management (ERIA-WG on
Disaster Management) that will deliver the papers on following topics:
a. Economic impact of disaster on Asian economies
i. Exploratory methodology to estimate impact of disaster at macro level
ii. Methodology to estimate distributional impact of disaster
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b. Impact of disaster on Household Welfare
i. The Framework of Disaster, Poverty and Coping Strategy: Indonesia’s
Micro/Household Level Study
ii. The Framework of Disaster, Poverty and Coping Strategy: Philippines’
Micro/Household Level Study
c. Insurance system and Risk Management
i. Imposing Risk Management for Natural Disaster
ii. Natural Disaster Insurance in Developing Countries and Regional
Cooperation
d. ASEAN efforts on Disaster Management
i. AHA Center: The current role and future
ii. For Better Preparedness: What can we do?
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21 Policy on Disaster Prevention and Reduction for Industrial Parks in East Asia
(In Progress)
Abstract
Recent disasters, such as the 2011 Japan Earthquake and Bangkok flood, have caused
significant damage to industrial clusters in East Asia. The impact of these disasters is felt on
the global supply chain and it also triggers the shifting of production sites from existing
industrial clusters in order to diversify natural disaster risks. However, existing industrial
clusters continue to play important roles for an efficient production network. This study
addresses the need to take sufficient policy measures to counter natural disaster risks as an
integral part of policies promoted for industrial clusters.
The objectives of the study are:
1. To identify vulnerabilities of industrial parks and their supply-chain/logistics network
to counter large natural disasters in selected East Asia industrial parks.
2. To identify issues of concern on disaster prevention for the industrial parks including
disaster recovery on their logistics networks.
3. To propose necessary policies on disaster prevention for the industrial parks from the
point of view of resiliency of logistics network.
Methodology
The study is divided into two parts: (i) Survey and Analysis, and (ii) Examination of
Critical Issues and Policy Recommendation. Survey and Analysis related to the logistics
network is conducted in selected industrial parks in ASEAN countries to review and analyze
the characteristics, vulnerabilities, policies adopted, preparedness, and response from
industrial parks to natural disast